Why Do we Need to Rethink Macroeconomics?

/ / Rethinking Macroeconomics
Baby's hand over mother's hand

Since the 1980s, growth processes have been undermined by inadequate understanding of the interconnection between standard notions of “the economy” and the care economy. The consequences of gender-blind economic policies, and the sorts of growth and distribution dynamics that result, particularly for gender inequalities and care provisioning, have been far reaching and complex. They require a deeper understanding of the ways that the invisibility of unpaid care in macroeconomic policy formulation and analysis have led to persistent underinvestment in care provisioning, reproducing and reconfiguring gender hierarchies.
This is particularly important in the context of the rapidly increasing differentiation across households across the globe in terms of ability to access paid care services for childcare and elderly care, the stalling of women’s participation in the labor market, and the consequent shift in global demographics (aging in some regions, population growth in others). There is almost no work to date on the gendered impact of fiscal and monetary policies that moderate the shift of the provision of care services from households onto the public and private market sectors. Such changes will affect macroeconomic outcomes through their impact on the distribution of women’s time between paid and unpaid labor, the productivity of care work, and the associated impacts on labor force participation rates, savings, pension accumulation, and tax contributions. There are distributional consequences as well, as these processes have differentiated effects by class, race or ethnicity, age and migration status. The current over-reliance on gender-blind representative agent models renders these dynamics invisible.

The following papers offer great introductions to the importance of engendering macroeconomic theory and policy:

Why macroeconomic policy matters for gender equality by James Heintz (UN Women 2015):

This brief synthesizes research findings, analysis and policy recommendations on creating an alternative gender-responsive macroeconomic agenda.

Macroeconomic policy, including fiscal and monetary policy, is often thought of as gender-neutral. But economic policy choices affect women and men differently because of their different positions in the economy, both market (paid) and non-market (unpaid). For instance, budget cuts that reduce social spending may increase the demands on women’s unpaid household labour, while trade liberalization may negatively affect women’s employment in contexts where they are overrepresented in import-competing sectors, such as agricultural food crops. Yet, macroeconomic policies to date have paid scant attention to these issues and have therefore not been conducive to the achievement of gender equality.

Focusing on goals, measurement and policy instruments, this brief lays out the key problems with current macroeconomic policies and provides building blocks for an alternative macroeconomic agenda that is rights-based and gender-responsive.

Engendering Macroeconomic Theory and Policy by Stephanie Seguino (World Bank 2017):

This survey paper reviews the main threads of the subfield of gender and macroeconomic literature. It looks first at research linking gender relations embedded in institutions at every level of the economy, from the household, labor, and credit markets to economic development and growth. It then reviews the reverse causality: the differential impact of macro-level policies on men and women. Following these assessments, the paper proceeds to identify topics for future research, focusing on areas where adding a gender dimension would sharpen macro-economic models and increase the relevance of their results. Given the large body of research available, this review is not exhaustive, but instead, focuses on research publications that have significantly influenced the way we understand the two-way causality between gender and the macroeconomy.

Leave a Reply

Your email address will not be published. Required fields are marked *